A recent report by the Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG) sheds light on the evolving landscape of semiconductor manufacturing, particularly in the United States and China.
According to the report, the United States is poised to significantly bolster its domestic semiconductor manufacturing capacity by 2032, surpassing China in the production of advanced chips. Projections indicate that the US will increase its share of advanced chips, particularly those below 10-nanometers, to 28 percent by 2032, while China’s share in the same category is expected to be a mere 2 percent.
Taiwan and South Korea currently dominate global capacity for the production of sub-10-nm chips, with 69 percent and 31 percent share, respectively. However, the US is on track to narrow this gap, fueled in part by initiatives like the Chips and Science Act passed in 2022. This legislation aims to bolster the country’s chip manufacturing capacity and has already garnered commitments from industry giants like Taiwan Semiconductor Manufacturing Co (TSMC), which plans to invest US$65 billion in building a 2-nm plant in Arizona.
Despite the projected growth in the US semiconductor industry, Taiwan and mainland China are expected to maintain their leadership in global wafer fabrication capacity by 2032, with 21 percent and 17 percent share, respectively.
China’s aggressive investments in its domestic semiconductor industry, totaling over US$142 billion in government incentives, have propelled significant growth in wafer fab capacity between 2012 and 2022. Mainland China currently boasts over 3,000 fabless companies, focusing on various sectors such as consumer electronics and industrial control systems. However, the report highlights that China’s domestic chip designs may lag behind in competitiveness compared to advanced CPUs, GPUs, and FPGAs, as well as higher-end servers and computer power management.
Nevertheless, China maintains a lead in global capacity for assembly, test, and packaging facilities, with a 30 percent share compared to Taiwan’s 27 percent. This dominance is attributed to factors like lower construction and skilled labor costs in mainland China and Taiwan.